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St. Charles IL divorce lawyerSo much of the conversation when we talk about divorce centers around the allocation of assets–property, money, investments. But a couple’s allocation of debt is often just as important, especially in an age where so many people carry the burden of enormous student loans.

Here, we will discuss different types of debt, the factors that can affect debt division, and the process by which debt is divided in an Illinois divorce.

Types of Debt

Marital assets and debts follow a similar pattern in a divorce. Debt that was owned by spouses prior to the marriage will generally be owned by that same spouse after a divorce. Debt that was taken on during the marriage is generally considered marital debt and will be divided between the spouses.

St. Charles IL divorce attorneyWhen going through a divorce, you may not have future consequences at the top of your list of priorities. Many people either forget about the long-term consequences of divorce or ignore them. Either way, not considering the long-term impact of your decisions can cause more stress in the long run. The downfall for many people going through a divorce occurs during the asset division process. You may be focused on your assets and fighting to get what you believe you deserve in the moment, but it is also necessary to understand the long-term effects of your decisions, including the implications for your taxes after divorce.

Things to Keep in Mind About Taxes During Divorce

When it comes to dividing your property and debts, taxes should also be a part of the equation. Even if tax issues are not an immediate concern, they can impact your overall financial health in the long run. When you go through the asset division process, here are a few things you should take into consideration concerning your tax situation:

  • Your tax filing status will likely change. Most married couples file joint tax returns, but once you are divorced, you will no longer be “married filing jointly,” but rather, “single.” This can change the amount of tax that you owe come tax time, depending on your income.

Kane County divorce lawyerYour marital status does not directly affect your credit score. However, that does not mean that it cannot affect it indirectly. It is not uncommon for a person to notice a difference in their credit score during and after a divorce because of all of the financial changes that this process brings. Having a decent credit score is important for a variety of reasons. Your credit score is how lenders determine whether or not they will do business with you. If your credit score takes a hit, you could have difficulty purchasing a vehicle or home, renting a place to live, or opening any other type of line of credit. Protecting your credit score should be a priority at any time, but especially during your divorce.

Steps to Take to Protect Your Credit

If you are planning to file for divorce, it is important that you pay attention to your finances. Your entire life is changing, and it is easy for something to slip through the cracks and harm your credit score. Here are a few things you can do to help protect your credit score during your divorce:

  • Obtain a copy of your credit report. First, you should order copies of your credit report from all three credit-reporting bureaus. This will allow you to see exactly which accounts are linked to your credit file. Make note of all of the joint accounts that you and your spouse have. Look for any discrepancies on your credit report, such as incorrect, incomplete, or missing information.

St. Charles IL divorce attorneyDivorce is an emotionally and financially complex process that affects around 800,000 Americans each year. Sadly, some studies estimate that a person’s net worth could be reduced by as much as 77 percent by the time their divorce decree is finalized. The good news is that this is not always the case. In fact, those who plan and prepare effectively for divorce often fare better than those who do not.

Start by Taking an Honest Look at Your Debt

You may have heard about how important it is to account for all of your assets before your divorce. This is true, of course, but it is often just as important to carefully examine your debt. After all, debt is not going to simply disappear once the divorce is over. Instead, any debt belonging to the marital estate will be distributed between you and your spouse, much like your assets will be. However, there are often additional complexities when it comes to dividing debt. For example, mortgages and other large debts may not be as easy to “split” because the lender or extender of credit may not be willing or able to remove one of you from the account.

At first glance, this might not appear to be much of an issue, but it can be problematic. For example, if you attempt to obtain a new line of credit, such as while trying to buy a car or a new residence once the divorce is over, you may have a hard time managing your debt-to-income ratio. Alternatively, if your spouse is considered “responsible” for the debt in the divorce but your name remains on it, your credit could also take a hit if they ever default on payments.

Kane County divorce lawyerdivorce can be a stressful and contentious matter, and not just because of the impending end of the relationship. Financial matters are also particularly important in divorce, and they can have a lasting effect on each party’s quality of life. If you are planning on filing for divorce or have recently been served, beware of these money issues in your case and learn how an experienced divorce lawyer may be able to help protect your interests and financial future.

Housing and Living Expenses

When couples split, one typically leaves the family home. The other might stay, or the couple might agree to sell the home and have both parties vacate the premises. Regardless of the living arrangements that you agree to, you should prepare for a possible increase in living expenses. You should also consider how a decrease in income—a common by-product of divorce—will affect your financial situation. As an example, you might consider downsizing before the proceedings begin if maintaining the family home is not a viable option.

Challenges for Disadvantaged Spouses

In a marriage, one spouse might handle all of the couple’s finances, bills, and expenses. In some cases, this same spouse is also the sole income earner. When these two realities are combined, it can create a serious disadvantage for the non-earning spouse. While maintenance and child support may be available, including while the divorce proceedings are pending, disadvantaged spouses often lack the knowledge or resources to pursue such provisions on their own. If you are in such a position, an experienced attorney can help, even if you do not have funds of your own. Do not forgo talking to a lawyer just because you lack available cash. Instead, find out what options may be available to you.

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